Nevada Tax Benefit Summary

Property Taxes

Douglas County Click on the link for more info on Nevada Taxes.

For the owner-occupied single family residence, the property tax bill is capped at an increase of 3%. Excluded from the cap is any increase in the assessed valuation of the property from the prior year which is due to any improvement or change in the actual or authorized use of the property.

For residential rental property the 3% cap also applies if the rent charged does not exceed the fair market rent as most recently published by the United States Department of Housing and Urban Development.

For all other property (second homes?) in a county including centrally assessed property, the cap over the prior year is equal to: The average percentage change in the assessed value of a county over the current year plus the previous nine years, or 8%, whichever is less, and then compare that value to twice the increase in the CPI for the previous calendar year. After comparison, the higher percentage between the two is the percentage limit on the increase in property taxes over the previous year.

HOW THE TAX RATE IS DETERMINED

The tax rate is proposed in April of each year based on the budgets prepared by the various local governments: counties, cities, school districts and special districts such as fire protection districts, etc.

Local government budgets, effective with FY 2005-2006, are constrained by the amount of revenue that will be generated under the partial tax abatements which limits the increase in property tax to 3% for single family residences and no more than 8% for other property.

As a result of the partial property tax abatements, a local government may determine that an additional tax rate is necessary to satisfy outstanding obligations secured by the property tax. The local government may increase the tax rate to cover payment of the obligation as long as that portion of the rate is stated separately on the tax bill. The local government may also go to the voters for approval to impose a rate which is exempt from the partial abatement caps.

HOW THE TAXABLE VALUE OF  REAL PROPERTY IS DETERMINED

The Assessor estimates the land’s taxable (full cash) value by considering its location, zoning, actual use, etc. Land values are estimated from market sales or other recognized appraisal methods. The taxable value of buildings is the estimated replacement cost new less depreciation. The land value is added to the improvement’s taxable value to arrive at the property’s overall taxable value.

Property in Nevada is required to be reappraised (revalued) at least once every five years. Between reappraisal years the values are adjusted each year by factors approved by the Nevada Tax Commission. Additional appraisals may occur when improvements are added, new structures are built or because of use or zoning changes.

HOW PROPERTY TAXES ARE CALCULATED

To compute the property taxes for a particular parcel of property, simply multiply the assessed valuation by the tax rate as shown in the following example.

Taxable value x 35% = assessed value x tax rate = property taxes due.

NOTE: Effective starting with FY 2005-2006, the total property tax due must not exceed the total property tax billed the previous year by more than 3% for an owner-occupied single family residence or certain residential rental property, and must not exceed 8% for all other real property. If the property tax due exceeds the applicable cap, it will be artificially lowered by the County Treasurer before property tax bills are sent to the taxpayers.

REAL PROPERTY Example
Taxable Value $ 1,000,000 x 35%
Assessed Value 350,000 x $ .0298 (1)
Property Tax due $10,043.00 (2)

NOTES:
(1) $2.98 per $100.00 assessed valuation
(2)
At this point, compare the property tax bill you paid the previous year to determine if the taxes as calculated above exceed the cap described in the previous paragraph.

For further information, visit the Nevada Department of Taxation site.

Other Tax Benefits

  • NO corporate income tax
  • NO personal income tax
  • NO franchise tax
  • NO unitary tax
  • NO inventory tax
  • NO inheritance tax
  • NO estate tax

OTHER NEVADA TAX BENEFIT INFORMATION

Your Nevada Connection
Many individuals and businesses are motivated to relocate to the “Silver State” by the fact that Nevada does not impose a state income tax. Is relocation an option you should consider?

A Question of Residency
The single, most important prerequisite for taxpayer to take advantage of Nevada’s “tax hospitality is domiciling one’s self in the state. In simple terms, this means the individual must make Nevada his principle place of residence-his primary home.

The Close Connection Test
Various factors are considered in determining whether a taxpayer has close ties with a particular state, including:
Where are you physically present
Where you have sources of income
where you register to vote
Where you own a house
Where you claim homeowner’s exemption
where you driver’s license is issued
Where you closet business contacts are, i.e., attorneys, accountants, banks, etc.
Where you closet social contacts are, including clubs
Where your vehicles are registered
Where you minor children attend school, and whether you paid resident or non-resident tuition
Which state has jurisdiction in the administration of your wills and trusts
where you obtained a homestead exemption
Where you maintain a safety deposit box
Where you filed an affidavit of domicile
where you own a cemetery plot

While no factor by itself can positively determine residency, registering to vote or claiming the homeowner’s exemption in California, for example, has been found to make the taxpayer a California resident, regardless of the other factors.

Benefits to Individuals
Individuals who are “domiciled” in Nevada and become Nevada residents will generally escape state taxation of their income, except for income arising from sources within another state. Even taxpayers who may continue to be required to “source” one or more items of their income to a taxable state may still enjoy a significant reduction in their overall state tax burden.

Benefits to Corporations
A corporation organized and domiciled in Nevada could significantly reduce its state tax burden. States generally tax corporate business income based on the corporation’s level of activity within and outside that state. Therefore, shifting at least part of the corporation’s business activities to Nevada will generally result in a reduction of state tax. In addition, being organized and domiciled in Nevada will eliminate state taxation of the corporation’s non-business income.

Benefits to Trusts
Likewise, trusts with Nevada fiduciaries can gain a significant tax advantage. In California, for example, trust with California fiduciary are taxed on income retained in the trust, even if all beneficiaries are California non-residents. With a Nevada fiduciary, non-California source income, distributed to non-California beneficiaries or retained and taxable in the trust, will escape California taxation.

Finding Out More
For more information, click here.

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